Legislation would increase OCD's authority to collect fines

Oil and gas production sites, like this one seen in Lybrook in 2014, could be subject to higher fines in the event of an environmental incident under a bill sponsored by two Democratic lawmakers in the state Legislature.(Photo11: Daily Times file photo)

FARMINGTON — A senate bill making its way through the state Legislature aims to hold oil and gas operators accountable under the Oil and Gas Act, but opponents say it could lead to operators being punished based on political motives.

A state Supreme Court decision in 2009 ruled that the Oil Conservation Division cannot directly impose penalties on operators for violations of the Oil and Gas Act. Instead, the regulatory division must go through the state attorney general’s office. That means the state must sue operators to collect on penalties.

The bill sponsored by Sen. Richard Martinez, D-Española, and Sen. Matthew McQueen, D-Santa Fe, would allow the Oil Conservation Division to impose the penalties without going through the court process. It would also increase the amount the Oil Conservation Division can fine operators for violations of the Oil and Gas Act.

The bill is backed by Earthworks, a nonprofit focused on holding energy companies accountable.

“While the violations continued to rise, the penalties dropped off significantly,” said Nathalie Eddy, the Colorado and New Mexico field advocate for Earthworks.

Earthworks claims that while violations and spills have increased since 2009 there have been few penalties assessed to operators. For example, an Earthworks study found more than 1,700 spills or violations in 2018 but no fines were assessed. In contrast, Earthworks states there were 856 spills or violations in 2009 and the state collected $727,000 in fines.

Eddy said that while there is an oil and gas boom going on in parts of the state, the agency tasked with overseeing the industry does not have the teeth to pursue fines.

New Mexico Oil and Gas Association spokesman Robert McEntyre said operators should be held accountable for violations. However, McEntyre said having a judge hear a case ensures the state has proof violations occurred and that penalties are levied through a fact-based approach.

In contrast, the Oil Conservation Division is made up of appointed officials. McEntyre said there is a potential that cases could be heard differently based on political views of whoever is in power.

He highlighted Hilcorp Energy Company’s recent application to increase well density in the Blanco-Mesaverde formation in the San Juan Basin. The application was initially granted while Gov. Susana Martinez was in office. A little more than a month after Hilcorp’s application was granted, Gov. Michelle Lujan Grisham and State Land Commissioner Stephanie Garcia Richard took office. That meant the Oil Conservation Commission, which is part of the Oil Conservation Division, had new members making up the majority of the commission. The previous decision was suspended and a new hearing was scheduled for May.

In addition to giving the Oil Conservation Division the ability to impose and collect fines for violations for spills, the bill would increase the amount operators can be fined. Currently, an operator can be fined $1,000 a day for violations. The bill would increase that to $15,000 a day.

Sen. Martinez said increasing the fine would bring it in line with penalties for violations of other environmental standards, including the Air Quality Control Act.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.